As inflation cools, pressure piles on SARB MPC to cut repo rate in September
The central bank’s monetary policy committee is set to mull over a number of factors, including the inflation path.
South African Reserve Bank Governor Lesetja Kganyago. Picture: @SAReserveBank/X
JOHANNESBURG - Pressure is on for the South African Reserve Bank (SARB)'s monetary policy committee to cut the repo rate at the September meeting, as inflation continues to cool.
Inflation eased to a three-year low on Wednesday, coming in at 4.6% in July, down from 5.1% in June.
The latest inflation print released by Stats SA came in lower than market expectations.
The central bank’s monetary policy committee is set to mull over a number of factors, including the inflation path.
The upcoming decision by the US Federal Reserve on the fed rate will also form part of the reserve bank’s deliberations in September.
Economists believe the improved inflationary outlook and a rate cut by the US Fed could set the table for the reserve bank to start its cutting cycle.
FNB senior economist, Koketso Mano, weighed in.
"We are also thinking it could be earlier rather than later. So September is definitely a live meeting and an interest rate cut is definitely on the line here."
Economist at the North West University Business School, Raymond Parsons, predicts a 25 basis point cut.
While he said it would ease borrowing costs for businesses and consumers, he warned it still wouldn’t be a silver bullet for economic growth.